COVID-19 cases cause big losses for hospitals
Hospitals are facing “massive losses” treating patients with COVID-19––even with higher reimbursement for service, according to a new study from Strata Decision Technology.
In fact, 97% of health systems are losing an average of $2,800 per case. Worse, some are losing between $8,000 and $10,000, the study found. Strata Decision used a proxy group of related patient cases and modeled the effect on a sample of U.S. health systems.
Under a proposed 20% increase in Medicare reimbursement specifically for COVID-19 cases, hospitals still lost out. Hospitals still face a loss of $1,200 on average per case with higher a reimbursement rate. Some hospital systems can face between $6,000 and $8,00 in losses.
The main reason for hospital losses is due to the higher-than-usual costs to treat COVID-19 patients. Treatment is complex, requiring intense cleaning regimens, more frequent X-rays and CT scans, shortages of personal protective equipment, as well as higher supply and drug costs, according to Strata. Furthermore, some hospital systems are facing a huge number of patients, stretching their resources thin.
To add insult to injury, hospitals aren’t making revenue on elective surgeries after suspending these procedures to make space for treating COVID-19 patients. This action, which was directed by CMS, prevents cost shifting for hospital systems, as elective surgeries are the primary source of revenue. As much as 90% of hospitals could start to see negative profit margins from COVID-19 patients after canceling elective surgeries.
To combat this enormous cash flow problems for hospitals, Strata recommends additional financial relief from the government and other sources. Namely, Strata urged a 35% increase in Medicaid reimbursement for COVID-19-related cases.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."